UKG is responsible for policymaking and implementation across jurisdictions of each member government in seven fields, namely disaster prevention; tourism cultural and sports promotion; industrial promotion; medical care; environmental conservation; qualification tests and licensing; and training for officials. This unitary approach enables the member entities to address economic, social, and environmental challenges more efficiently and effectively through development and implementation of regional-wide policies, such as public infrastructure projects and public service programs, while reflecting their local contexts.

The unique features of TMG’s expenditure profile compared to all other local governments are found to be more capital investment and the existence of an adjustment cost that contributes to fiscal balance among the 23 special wards. Capital investments are spent on urban infrastructure such as roads and bridges, schools, and social welfare facilities. TMG continued to invest in large-scale public facilities as part of the economic stimulus despite the sharp drop in tax revenues after the crash of Japan’s bubble economy during the 1990s. Consequently, it faced a serious financial crisis. The government made concerted effort to reduce expenditure under a fiscal reform scheme for about a decade. Once the fiscal balance was recovered, construction-related expenditure has continued to increase over the last decade.

Under unstable economic circumstances, earmarked taxes enable the TMG to keep stable and multiple-year resources for large-scale capital projects. Among more than 13 kinds of local taxes, two are earmarked for urban capital improvements. City planning tax, which accounts for 4.7% of the total revenue, is levied on land parcels and properties in the urban development promotion areas and collected together with Fixed Assets Tax (property tax). The revenue is specified to use for urban development and land readjustment programs. Another earmarked tax for urban capital improvements is Establishment Tax, which accounts for 2.1% of the total revenue. This tax is levied on offices with large floor areas and/or with a large number of employees in the 23 special wards and four cities of Tokyo. The revenue is to be used specifically for improving urban business environments.

For the creation of a new open space where people can get together, the local government coordinated open-air dining spots through a unique two-step management system allowed by the  revised Local Autonomy Act. In the first step, the government built two one-story houses (Photo 1 and 2) to be used for cafes inside the park by special permission from the governor. Meanwhile, the government designated a public interest incorporated association as the permitted operator of the new buildings. In the second step, the association contracted out the café operation to two private companies selected from 15 applicants through a competitive bidding process. Selection criteria of the operating companies included consistency to the park’s basic revitalizing plan as well as profitability and quality of services to be provided to park visitors. Notably, with this two-step management a part of the profit from these two cafes can be efficiently reinvested to maintain and upgrade the park environment.